Tenants fail to pay the bedroom tax

A large proportion of tenants hit by the bedroom tax have so far failed to pay the resulting shortfall in their rent.

Several of the UK’s largest housing associations have this week revealed thousands of tenants have not covered their rent since the controversial policy was introduced on 1 April.

The bedroom tax cuts the benefit payment of working-age social housing tenants with spare bedrooms. In some parts of the country, up to half of affected tenants have not paid anything at all to cover the average £14-a-week shortfall.

This has sparked fears that landlords’ income streams and ability to borrow cheaply to build new homes could be hit if the trend continues.

Liverpool-based Riverside Group said around half of its 6,193 affected households receiving full housing benefit have not paid anything at all to cover the shortfall, while a quarter contributed something but did not pay their rent in full. Just one in four affected tenants paid the full amount.

James Tickell, director of consultancy Campbell Tickell, said: ‘These are the first signs of a significant threat to housing associations’ income streams.’

Hugh Owen, director of policy and communications at 54,000-home Riverside, said: ‘Such a significant amount of people paying nothing proves there is a real issue of affordability.’

He added that some of the non-payment may be due to delays in setting up direct debits or to tenants awaiting decisions on discretionary housing payments and that a clearer picture will emerge after several months.

Guinness Partnership said a third of 3,000 affected tenants have not met the shortfall. Simon Dow, chief executive, said: ‘If a third of our residents are not able to pay the whole of their rent, then obviously there would be a significant increase in arrears… as well as a crisis for the household.’

Yorkshire-based, 25,000-home Incommunities said 601 of 2,414 affected households had not paid anything to cover the shortfall. Wakefield and District said 42 per cent of 5,000 affected households have not paid their rent, while two-thirds of the 7,350 tenants of Glasgow and Cube housing associations had underpaid.

Spectrum Housing Group said 259 of 1,151 affected households failed to pay any of the shortfall at a cost of £17,000 in income - a result it described as ‘better than expected’.

Yesterday the government announced it is extending six pilot schemes examining the impact of direct payment of housing benefit to tenants under universal credit. This will give the pilots an extra six months to assess how the bedroom tax and other welfare reforms are influencing rent arrears.

The worst financial impacts of the bedroom tax for housing associations have been mitigated by significant investment and resources, but the policy is still having a serious impact on the lives of tenants.